Dubai
Marriott International, the owner of the Sheraton brand, has said it intends to exit up to four per cent of its entire global hotel portfolio in the next two years, as it implements a wholesale company overhaul.
As a hotel operator, Sheraton will rarely invest its own capital in a property; upkeep is broadly handled by the hotel owner, which would often be an investment firm or wealthy family.
In this case, Sheraton has said it intends to end a number of such partnerships if the hotel owners fail to invest in renovations that it has prescribed.
Julius W. Robinson, senior vice-president and global brand leader for classic full service brands at Marriott International, said that a brand like Sheraton would normally exit between 1 and 2 per cent of its hotel portfolio a year.
As a result of the brand transformation strategy, which will require extensive renovations to some hotels, the company anticipates the number of exits to be “more like 3 to 4 per cent” over the next year or two.
“I would hope not to exit as many hotels, although we’re going to be disciplined with our approach,” Robinson said.
The senior executive echoed the comments of his boss, Marriott International chief executive Arne Sorenson, who said on Monday that the new brand strategy would set Sheraton on a “new, disciplined and successful path”.
Elaborating on it, Robinson said that over the past two years, the company had placed a greater importance on “the opportunity to have clear standards and to hold everyone accountable to those standards.”
Consequently, since the end of 2016, the company has exited 17 hotels in the portfolio, or 6,000 rooms, “that for some reason or another didn’t exactly follow what the strategy was for the brand.”
“For those hotels that can’t meet the [new transformation] plan, or choose not to meet the plan, making sure there’s a proper exit from the brand has been very important. That’s what we mean by disciplined approach,” Robinson said.
A further 2,000 rooms are expected to depart by the end of the year, according to Marriott, bringing the total number of rooms exited since the end of 2016 to 8,000. During the same period, 5,000 rooms have been signed to the portfolio.
In its statement on Monday, Marriott said that it estimated approximately $500 million in renovations had already committed to by hotel owners.
Globally, the company claims that 25 per cent of Sheraton hotels have committed to renovations with some already underway.
“We have commitments on renovations from the Middle East, I can’t tell you exactly what that number, financially, would look like … We do have a few hotels in the Middle East that are committed to renovating … We expect those numbers to increase as we talk about the new direction for the brand,” Robinson said.
On a recent visit to the UAE, Robinson said he was encouraged by the affinity residents had for Sheraton and its hotels.
“People are rooting for this brand [in the UAE] and felt like it has just lost its way a little bit over the years,” he said. “[We’re hoping] Sheraton will reclaim its rightful place at the heart of communities.”
